GPG's UK pension woes deepen

Last updated 10:56 13/08/2014

Relevant offers


Female lawyers charge-out rates lag behind their male colleagues Weight Watchers campaign joins list of PR blunders Opportunist builders, dodgy steel and shonky standards create new building crisis 'worse than leaky homes' Skills shortage results in firms looking internally to fill roles, recruitment firm says Pumpkin Patch in trading halt - too much debt, not enough capital British American Tobacco offers to buy Reynolds in US$47 billion deal Backlog of defective buildings and shoddy workmanship sparks calls for building warranties Ikea NZ Facebook page set up: Is it finally coming to NZ? Auckland Council and contractors ordered to pay $120,000 to the family of killed rubbish truck worker 71yo asked to stand on hot water cylinder to plug in phone after bizarre UFB install

The pension hole that has locked up Guinness Peat Group's efforts to return capital to shareholders has deepened.

GPG reported an interim profit of $8 million for the six months to June 30, down from $28m last year. But it said that represented a $17m turnaround in its continuing operations, achieved thanks to an improvement its core investment, Coats, which increased its interim revenues 2 per cent to £502m (NZ$1 billion) and more than doubled its net profit for the period to US$18.7m (NZ$22.2m).

However, GPG said the deficits in its British Coats, Brunel and Staveley pension funds had blown out by a further £44m over the six-month period to reach £222m.

The company is locked in negotiations with British pension regulator TPR over how to deal with the shortfall.

GPG said a previous proposal that it retain £124m on its balance sheet to support the Brunel and Staveley schemes had not been sufficient to satisfy TPR and it was now proposing to retain £170m.

If GPG was unable to reach an agreement with TPR, it was likely the pension regulator would issue a determination, though that was unlikely to happen this year, it said.

"It could take several years before matters are resolved should the formal legal process be followed to its conclusion, including the relevant parties pursuing all rights of appeal," the company warned.

GPG said any decision on the future capital structure of Coats and a "return of value to shareholders" would be deferred until TPR completed its investigations.

The position of the pension funds had worsened because British interests rates had fallen three times further than the decline in the rate of inflation.

Chairman Mike Clasper said all options were being explored to resolve the issue "recognising the interests of both our shareholders and pension scheme members".

Shareholder funds decreased by $84m to $782m during the half year, primarily because of the decline in the funding position of its pension funds.

GPG shares closed unchanged at 67 cents on the NZX yesterday, valuing the business at $943 million.

Ad Feedback

- Stuff

Special offers

Featured Promotions

Sponsored Content